What if there was a single strategy that could send your sales soaring this holiday season? It would keep shoppers coming back to your site and encourage them to spend more at checkout. It would also increase your loyal customer base and have a positive impact on your bottom line. Sounds too good to be true, right? Wrong.
Though it’s not necessarily a magic bullet, offering free shipping is one of the best strategies for reaching your sales goals this holiday season. Competitive shipping deals often make or break a consumer’s decision to buy, especially during the holiday season. Offering free shipping can help online sellers achieve the following goals.
Benefit 1: Reduce shopping cart abandonment rates
Shopping cart abandonment is the most dreaded customer action by online retailers. There’s an entire industry developed around helping sellers combat it, but experts agree shipping costs are the No.1 reason shoppers choose not to go through with an order.
In fact, 44 percent of online buyers indicated high shipping costs were the reason they ditched their order pre-checkout, according to Invesp. As further proof, Internet Retailer reported last year’s Free Shipping Day had the lowest shopping cart abandonment rate during the final six months of 2011.Last year, three out of every five online transactions between Thanksgiving and Cyber Week, the week after Thanksgiving, included free shipping
Benefit 2: Stay competitive
Everyone, from big-name retailers to one-person Etsy shops, offers discounted shipping, making it increasingly difficult for retailers to compete without it. Last year, three out of every five online transactions between Thanksgiving and Cyber Week, the week after Thanksgiving, included free shipping.
Ultimately, free shipping is becoming a necessity for retailers to stay competitive during the holiday season. Case in point: nine in 10 retailers planned to offer the service at some point during last year’s record-breaking holiday season, according to the National Retail Federation.
Benefit 3: Increase sales
Since free shipping keeps you competitive and reduces shopping cart abandonment rates, it should come as no surprise the promotion also increases sales. In a 2011 study conducted by Forrester Research, online retailers reported a 10 percent to 20 percent overall increase in revenue from free shipping offers. Additionally, TechCrunch reported orders with free shipping are, on average, 30-percent higher in value than orders that include shipping costs.
To help encourage these higher-value purchases, online sellers can establish a minimum order consumers must meet to qualify for free shipping. Though free shipping with no minimum order is the most popular version of the promotion, 70 percent of shoppers will add items to their cart to meet minimum-order requirements, according to comScore.
Benefit 4: Improve customer retention
Customer retention is an increasing challenge for online retailers thanks to instant price-comparison tools. Because shipping costs contribute to the total price of an item, reducing or eliminating them on a consistent basis will keep customers coming back. In fact, the previously mentioned study by Forrester Research indicated “half of free shipping shoppers are repeat buyers.”
Amazon is a perfect example of customer loyalty as a result of a near-constant free shipping offer. The online behemoth is credited for kick starting the nearly ubiquitous demand for free shipping with its “everyday free shipping over $25″ offer.
Benefit 5: Meet annual revenue goalsThe ability of a free shipping-specific shopping day to exceed $1 billion in online sales shows the power of these offers
Sales during the holiday season represent anywhere from 20 percent to 40 percent of stores’ annual revenue, making it a crucial period for retailers to meet their financial goals. Since free shipping is the top incentive for online sales, a strategically timed offer can make up for slower sales months earlier in the year.
Benefit 6: Participate in holiday shopping events
With free shipping comes free publicity. Black Friday and Cyber Monday are known to be dominating sales days, but the holiday created specifically for free shipping offers—Free Shipping Day (this year Dec. 17)—has already surpassed Black Friday, the day after Thanksgiving, in online sales, and is just behind Cyber Monday, the Monday after Thanksgiving.
The ability of a free shipping-specific shopping day to exceed $1 billion in online sales after just four years in existence shows the power of these offers. The event also provides the perfect opportunity to test the results of a new offer.
During Free Shipping Day in 2009, for example, an art gallery in Yosemite National Park doubled its daily sales. And a one-woman jewelry store processed 103 orders during the event, compared to the two to three daily orders she normally fulfills. Neither of these small-business retailers offers free shipping year-round, but they were able to boost their year-end sales by using the promotion to encourage patronage.